Alberta municipalities are spending too much and taxpayers, especially small businesses, are paying the price, says the Canadian Federation of Independent Business.
In Central Alberta, Red Deer County is singled out as the worst offender — and 12th worst provincewide — while Clearwater County ranks among the province’s most restrained spenders, according to the CFIB’s latest report released this week.
The City of Red Deer falls about middle of the pack among Central Alberta communities and provincewide, where it is listed 87th out of 181.
Under the CFIB’s ranking system, 181 is best and that honour went to Medicine Hat. Worst is Saddle Hills County in northwestern Alberta.
Red Deer city manager Craig Curtis said the federation is using the wrong numbers if it’s goal is to measure fiscal sustainability.
In Red Deer, population growth from 2000 to 2011 was 40 per cent but real spending was up 108 per cent; or 48 per cent on a per capita basis.
Taking total operating expenditures includes millions of dollars in federal and provincial funding that passes through the city’s books but doesn’t affect taxpayers.
“It really distorts the picture. What you have to look at is what is your tax-supported portion increase,” said Curtis.
Crunching those numbers, Red Deer has seen increases at about four per cent a year, a little higher than inflation.
“I think we’re very sustainable in terms of where we sit,” he said. “We’ve got a capital plan which extends over 10 years, which is fully funded.
“Our operational situation is pretty healthy with the growth we’re getting.”
Municipalities also face all sorts of additional expenditures caused by provincial downloading, either by adding expenses, such as meeting new water treatment standards, or cutting grants.
Richard Truscott, CFIB’s Alberta director, said focusing on tax-supported expenses only misses how much money municipalities pull in through hikes in various fees, fines and levies.
While government downloading is often cited as an additional municipal cost, CFIB’s report, which is based on information from Municipal Affairs, shows government transfers have increased 379 per cent between 2000 and 2011.
Methodology aside, the key issue is that the current level of spending can’t be maintained without significantly boosting taxes, fees, service charges, other levies.
“That’s really our concern, is how sustainable is the spending they do, regardless of where they get the revenue from,” he said.
“At the end of the day, they’re either going to have to hike taxes, they’re going to have to borrow more money or they are going to have to look for additional sources of revenue to pay for it.”
Of particular concern to the CFIB is the increasing load being put on small business taxpayers, who often pay much higher rates than residential taxpayers.
Truscott said that operating spending in nine out of 10 municipalities exceeded population growth, showing the need for a municipal auditor general focused on spending practices ensuring money is being spent wisely and is sustainable.
“If (municipalities) don’t like our methodology then they should get on board with an independent municipal auditor general for local government,” he said, adding that B.C. has gone that route.
“I guess at the end of the day what we’re trying to do is encourage a conversation about municipal spending. According to our research, and if you ask small business owners, it is not sustainable over the long term when you compare it to the rate of growth and the number of people to pay those high revenues.”
Sylvan Lake Mayor Susan Samson also questions the CFIB’s approach to gauging municipal fiscal responsibility.
“It really has a business focus on municipalities, which is not a great way to compare the business we do,” said Samson. “How we run the Town of Sylvan Lake is different from a business.”
Town residents have an expectation of service that must be delivered. When asked, few residents would support fewer services, she added.
“Unlike a business, where you can be lean and mean and take the profits back, we can’t do that.”
Clearwater County ranks third best in the province for its fiscal sustainability.
According to CFIB’s numbers, Clearwater County’s population grew by a modest eight per cent between 2000 and 2011 and spending actually dropped 15 per cent — 21 per cent on a per capita basis.
Chief administrative officer Ron Leaf said while the report is complimentary he remains critical of the federation’s methodologies.
The impact of provincial downloading and grant cuts gets underplayed using the federation’s model. After taxes, grants are the biggest revenue source for most rural municipalities.
For instance, the province cut bridge funding in its last budget, which municipalities had to pick up to ensure bridges were maintained.
The municipality has benefited from a big spike in oil and gas activity, much of it fracking related. But at the same time, that has meant more road maintenance costs for the county.
Central Region rankings
(higher is better)
179 — Clearwater County
178 — Mountain View County
173 — Lacombe County
168 — Blackfalds
147 — Rocky Mountain House
127 — Innisfail
90 — Ponoka
88 — Olds
87 — Red Deer
85 — Ponoka County
83 — Stettler
70 — Lacombe
62 — Sylvan Lake
16 — Stettler County
For the full report, go to www.cfib-fcei.ca.
pcowley@www.reddeeradvocate.com